BY the end of next year, Malaysia will have close to 700 shopping malls with total net lettable area of 170 million sq ft. The biggest challenge will be to fill up the space amid the current economic backdrop, said Malaysia Retail Chain Association (MRCA) president Datuk Seri Garry Chua.
“Currently we have about 560 shopping malls operating nationwide with total net lettable area of about 135 million sq ft. The occupancy for majority of the malls in Klang Valley is between 85 and 87 per cent and that is considered okay if compared with neighbouring countries like Singapore.
“One way to fill the malls, both new and existing, is tourism. The government has to do a lot more in getting tourists from around the world to come here, especially from China.
“Chinese tourist spend about US$260 billion globally. They are the biggest spenders.
Indonesia doesn’t have a problem when it comes to retail shopping as they have a lot of people coming from China to buy their products,” Chua told NST Property.
He said it has been projected that by 2030 or 2035, tourism is going to be the largest contributor of gross domestic product (GDP) worldwide.
In Malaysia, retail contribution to the GDP could expand to 15 per cent from the current 10 per cent in the next five years and it could get better with tourism growth, he said.
For the second quarter of 2018,Malaysia’s retail industry reported a growth rate of 2.1 per cent in retail sales, compared to the same period in 2017.
MRCA members projected the second quarter growth rate at six per cent.
In June, some retailers enjoyed a 30 per cent increase in business, and others only 10 per cent after the zerorisation of the Goods and Services Tax (GST). High value-added retail goods, such as luxury items, sporting goods, electrical goods, electronics goods, gadgets and furniture, enjoyed higher sales compared to those of basic necessities, household goods and general fashion items.
MRA estimates average growth of 6.1 per cent during the third quarter.
Chua said the government should have more business-friendly environment and policies that will attract both investors and tourists.
“There is huge potential in the local retail industry, despite concerns ofaglut in retail space. For future retail, itwillhave to encompass a lot of digital and concept stores. The malls must be interactive. It must have things like artificial intelligence where you have robots moving around and interacting with people.
“There should be new dynamics in shopping. Mall owners must keep abreast with latest trends. Pricing and design must be right, especially for fashion brands.
“Malls are also adding more and more food and beverage (F&B) outlets. Previously, tenant mix comprised 20 per cent of F&B but today, it is 30 per cent,” he said.
Chua said for developers who are looking to set up malls, they should consider location and connectivity.
Other important points to consider include concept, target market, mixture of tenants, security, parking, cleanliness and making the malls interactive.